Ramachandran Balasubrahmaniam

Death Knell for Nortel?

Nortel has many problems that can be fixed. There are too many vested interests to do things the old way, and the executive team is out of touch with the technology team and the customers.

Case 1: (According to unnamed sources) Nortel had a deal with a large customer to develop features using the "Agile" model where value is generated in small increments, and customer feedback drives what is done next. The aim is to deliver business value quickly. It failed, but not because the customer didn't want it and was willing to pay. It was because the product managers didn't want customers talking to them or to their engineers, and they did not support that revenue-generating deal because it threatened their status quo.

Case 2: (From internal sources) The current executive team has implemented 6-sigma black belt processes without thinking about business value delivered. This has caused delivery deadlines to slip, thus delaying revenues. In fast-changing markets and technologies, delayed revenues is often the same as lost revenues. The executives don't get it.

Case 3: Most folks in the wireless business knew that to be able to sell GSM and CDMA equipment, you needed a UMTS story and product. Nortel sold off the UMTS technology and business, and as a result, GSM and CDMA sales have faltered. Apparently the executive team didn't know.

Case 4: (From internal sources) It is widely believed that the leaders of the Metro Ethernet unit asked Nortel to sell them, and not the other way around. That suggests that the executive team has lost control. Also, recently when the deal was about to close with a large far-eastern equpiment company to purchase Metro Ethernet, a very large American service provider cancelled a large purchase agreement for Metro Ethernet equipment because they didn't want to deal with the far-eastern company. What's amazing is that the executive team didn't know their customer well enough to realize that such an asset sale would jeopardize sales.

The current board of directors is clueless, otherwise they would make sweeping changes at the top. Shareholders are poorer, but still keep electing the same boards of directors. Too bad.